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Thursday, March 23, 2023

Stanbic IBTC Legal Provisions up 20% Amid N118bn in Potential Claims Against Bank

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Stanbic IBTC whose unaudited Full Year 2021 results revealed a 31.5% decline in earnings, increased its legal provisions by 20% last year to the tune of N6.15 billion amid a potential increase in claims against the tier-2 lender.

The Group litigation portfolio as at 31 December 2021 consisted of 373 cases and aggregate value of monetary claims against the Stanbic IBTC Group was N118 billion; $4.438 million and GB £74,284.64, according to data from its just released financial statement.

Included in the total number of litigation is the case involving Stanbic IBTC Bank PLC as Appellant where the Court of Appeal, Lagos Division delivered Judgment on Monday 20 September 2021 and reduced the damages awarded by the High Court from N50billion to N5billion.

The Bank being dissatisfied with the Judgment of the Court of Appeal, filed a Notice of Appeal and Motion for stay of execution of the Judgment.

The Bank’s Motion for stay of execution was granted by the Court of Appeal on 24 November 2021.

The Bank says it has compiled and transmitted the records of appeal to the Supreme Court and the Bank’s appeal is duly entered as SC/CV/1075/2021.

In the conduct of its ordinary course of business, the group is exposed to various actual and potential claims, lawsuits and other proceedings that relate to alleged errors, omissions, breaches.

The group makes provision for amount that would be required to settle obligations that may crystallise in the event of unfavourable outcome of the lawsuits. Estimates of provisions required are based on management judgment.

“The Directors are satisfied, based on present information and the assessed probability of such existing claims crystallising that the group has adequate insurance cover and / or provisions in place to meet such claims,” Stanbic IBTC, said.

Overall, FY’21 return on equity (ROE) and return on assets (ROA) slumped to 15.1% (FY’20: 24.4%) and 2.2% (FY’20: 3.8%), respectively.

The returns are the bank’s lowest in over nine years, according to analysts at research firm Cardinal Stone Partners.

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